UK biotech financing shoots up, setting up "a record year"
UK biotech sector has shrugged off a difficult economic environment with a 44% increase in venture capital investment in the third quarter to £270 million, taking the total for the year so far to £2.8 billion.
The strong performance could lead to the highest VC haul for the sector since 2021, according to the BioIndustry Association (BIA), and comes despite a decline in VC investment across all industrial categories in the UK.
It's worth recalling as well that a lot of this year's total to date comes from one transaction – Isomorphic Labs' £1.6 billion Series B – and BIA notes that the third quarter's tally is "in line with broader UK venture investment trends."
Basecamp Research led the charge in Q3 with a £104 million Series C, which it will use to train its next generation of AI models and drive AI-designed medicines toward the clinic, followed by two second rounds for Draig Therapeutics and Mironid, raising £49 million and £27 million, respectively.
The UK has again retained its position as the top destination for venture capital investment, raising 26% of the European total, which came to £1.1 billion, said the BIA in its Q3 report (PDF).
"Looking at the weak spots, mid-sized rounds were thinner on the ground this quarter, and seed funding fell to just £12 million across four deals," said BIA chief executive Prof Chris Molloy, who took the helm of the organisation earlier this year.
A big driver for recent transactions has been the close collaboration between the biotech and AI sectors in the UK, which Molloy said sets the UK apart.
"It's where life sciences and AI come together, and big pharma, big tech, and US investors are all backing companies here," said Molloy, pointing to two investments in London-based start-ups by tech giant NVIDIA in the last month (Prima Mente and Boltz Bio).
17 quarters without a biotech IPO
While the VC financing category is on the whole a bright spot for UK biotechs, there's no disguising the desultory situation for follow-on financing, which came in at £151 million in the third quarter, almost all from Silence Therapeutics’ £130 million Nasdaq raise, which came ahead of a $1.3 billion takeover offer from Merck KGaA.
"The pattern this year is clear: UK science attracts expert global capital, but we are missing an opportunity to see returns recycled in our own ecosystem, because too few British investors are taking part. This is true in both private and public markets," said Molloy.
"Our focus is on making sure companies at all stages of development can access the finance they need to grow, and that the UK benefits from the upside," he added. "Government has a vital role to play in getting the environment right for that, and in incentivising wealth creators to recycle their gains."
Ahead of this week's Autumn Budget, the trade organisation is calling on the government to give UK life sciences companies preferential access to the country's R&D infrastructure and a supportive tax system that has "enhanced R&D tax credits and incentives for reinvestment at its core."
